Tuesday morning headlines

Stocks extend rally: But not by much - Dow is up a few points in early trading.

Foreclosure settlement in the works?: Five big loan servicers may be ready to cut a deal with the 50 state attorneys general who are probing foreclosure practices, Bloomberg is reporting.

[Iowa Attorney General Tom Miller] said the attorney-general group has had at least one face-to-face meeting with representatives from all five of the largest banks, along with "follow-up phone calls." The group will reach individual settlements rather than a global agreement with the servicers, he said. "It won't be the same document for everybody," he said. "There are differences in the companies and in performances."

Brown gets good notices: The new governor set the right tone in outlining the state's challenges, says Sacramento Bee columnist Dan Walters.

While he offered no specifics on how he'll propose to close the state's seemingly perpetual budget deficit - those will be coming in the next week - it's evident that he wants to hit virtually every spending sector in hopes of motivating the Capitol's entrenched interests to seek compromise and band together to persuade voters to provide more tax revenue. Brown, it appears, will propose a two-track budget, one that slashes spending sharply and another with even greater cuts if voters refuse to raise taxes, or at least retain some temporary income, sales and auto taxes that are expiring.

Warners tops at the box office: The studio was tops in domestic revenue for the third consecutive year, at nearly $1.9 billion for 2010. But that was down 11 percent from the previous year. (The Wrap)

Book distributor stays with Borders: Ingram says it will keep supplying books to the struggling chain, one day after it was reported that another distributor was holding back. Borders is meeting with publishers this week. (WSJ)

B of A settles Countrywide case: The banking giant will pay Fannie Mae and Freddie Mac $2.8 billion in connection with claims that billions of dollars in sour loans from Countrywide had been misrepresented. The bank acquired Countrywide in 2008. (LAT)

Ad spending up: TV had the largest gains for the first nine months of 2010, with Internet display ads also doing well, according to Kantar Media. Even magazines reported a gain. (NYT)